1/ 2022 is on pace to see the lowest level of ship demolition since 2008.
This is into a global merchant fleet that has more than doubled in size over the same period.
High rates have ships out trading longer which means the fleet is getting older... for now.
This is into a global merchant fleet that has more than doubled in size over the same period.
High rates have ships out trading longer which means the fleet is getting older... for now.
2/ Although high shipping rates are likely to keep demolition muted for the balance of 2022, at some point this trend will need to reverse as 22% of the global fleet is now over 15 years old.
https://twitter.com/AllVentured/status/1521838498822696960?s=20&t=xvndYwT21uE5kyJPfn9CGA
3/ Very few of these ships over 15 years old will comply with new IMO carbon efficiency regulations take effect January 1 2023. Costs to retrofit are prohibitive and are likely to result in early retirement of older ships even with high rates.
splash247.com/less-than-25-o…
splash247.com/less-than-25-o…
4/ With much more stringent carbon regulations and costs prohibitive to keep 20+ year ships operating it is hard to see the over 20 fleet growing.
To hold the 20+ fleet size constant, demolition would need to pick up to nearly 60M dwt per year over the next 5 years.
To hold the 20+ fleet size constant, demolition would need to pick up to nearly 60M dwt per year over the next 5 years.
5/ 60M dwt/yr of demolition is nearly 4x the pace seen in the first half of 2022, represents around 3% of the existing fleet per year and would fully negate the very small orderbooks in #drybulk and #tankers over the next 3 years.
6/ Far below trend demolition in 2022 simply means more demolition in future years. Any weakness in rate expectations is likely to lead to a catch up in scrapping cushioning any drop in rates. Hard to see modern eco/scrubber ships dropping below breakeven in coming years.
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